Small business energy incentive

A little-known tax incentive that is aimed at encouraging businesses to improve energy efficiency is the small business energy incentive (SBEI).

You will have to jump through a few hoops to qualify, but depending on what sort of depreciating assets you have acquired between 1 July 2023 and 30 June 2024 (the bonus period), you may be entitled to a bonus deduction of 20% of the cost of acquiring up to $100,000 of eligible equipment. This is over and above what you would ordinarily claim, so it’s a bit like the old investment allowance, but with a $20,000 cap. That’s up to $9,400 extra in your pocket, which may make it worth a look.

The SBEI is available to businesses with an annual turnover of less than $50 million, where they have invested in certain eligible depreciating assets during the bonus period and where one or more of the following apply:

• there is a new reasonably comparable asset that uses fossil fuel available in the market;
• the new asset is more energy efficient than the one it is replacing;
• If it is not a replacement asset, it is more energy efficient than a new, reasonably comparable asset available in the market.

An asset can also be eligible if it is an energy storage, time-shifting, or monitoring asset, or an asset that improves the energy efficiency of another asset.

The bonus deduction is available on second-hand assets, although the comparable asset must be available in the market as new.

It only applies to businesses, so replacing gas appliances with electric ones in a rental property would not qualify. The bonus deduction does not apply to solar panels or motor vehicles.

If you think you may have a claim, please feel free to contact us.